A report released this week by Moody’s Investors Service provides an interesting analysis of two companies knee-deep in nuclear plant construction projects. The peer comparison takes a look at Georgia Power Co.—a Southern Co. subsidiary—and South Carolina Electric & Gas Co. (SCE&G)—a SCANA Corp. subsidiary.
Georgia Power is adding two new units to its Alvin W. Vogtle Nuclear Power Plant while SCE&G is adding two new units to its V.C. Summer Nuclear Station. Although the projects are nearly identical from a construction standpoint (both are adding Westinghouse AP1000 reactor plants), the report suggests that the companies have very different risk profiles.
According to Moody’s, the construction project is a “transforming event” for SCE&G. It notes that SCE&G’s nuclear generation dispatch will increase from roughly 24% currently to nearly 60% following completion of the project. For Georgia Power, the percentage will also increase, but only from its current 23% to 30% after the new units are online. The difference is even more dramatic when comparing parent companies. The new units represent only 2% of Southern Co.’s total capacity compared with 26% of SCANA’s.
Although some observers—including POWER Contributing Editor Ken Maize—have been critical of the Department of Energy’s decision to back Georgia Power with a federal loan guarantee, the Moody’s report recognized the loan guarantee as a modest benefit for Georgia Power compared to SCE&G, which did not pursue a federal loan guarantee.
Another notable difference between the two companies is in their customer bases. Being a significantly smaller company, each SCE&G customer will face a much higher cost burden for the new plant construction. Moody’s estimated $8,300 per customer for the V.C. Summer project, while Georgia Power customers will be required to pay $2,000 each for the Vogtle project. As it stands, SCE&G rates are already higher than Georgia Power rates, and annual rate increases are expected to be 3% versus 1% respectively, so the disparity is going to get worse.
Other items compared in the report include state regulatory frameworks, company financial situations, local partner relationships, and contractor dispute resolution approaches. The June 9-issued report is available for purchase on Moody’s website: www.moodys.com.
For more coverage of the Vogtle and V.C. Summer nuclear plant construction projects, see “Construction Begins at Two U.S. Nuclear Reactors,” “V.C. Summer Nuclear Station Construction Update,” “Plant Vogtle Leads the Next Nuclear Generation,” “Basemat Milestone for Plant Vogtle Unit 4,” and “V.C. Summer Unit 3 Nuclear Island Basemat Completed.”
—Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)